BBC to review pay procedures
Monday 16 July 2012
The BBC is to review the way hundreds of TV and radio presenters are paid after hearing claims at least one was “bullied” into staying off the payroll and told it would help him dodge the taxman.
Corporation bosses insisted it only employed 148 public faces through personal service companies because it was the industry norm and not to avoid paying tax.
But chief financial officer Zarin Patel said the level of public concern over the use of such arrangements meant it would look again at whether it was acceptable for the licence fee-funded broadcaster.
Wages paid through PSCs, which are perfectly legal, do not have income tax and national insurance contributions deducted at source, allowing tax dues to be reduced.
More than 2,000 senior public officials were found to be on deals that allow them to reduce tax bills after one controversial case sparked a Government crackdown.
"With the amount of public concern expressed today, I think I have to say yes we will review it, and we will review it with real seriousness," Ms Patel told the Commons public accounts committee.
"But can I emphasise that none of this is designed to avoid tax. That is not why we use an extensive number of freelance contracts at the BBC."
Her pledge came after a hour-long grilling by the committee, which included evidence from one unnamed whistleblower presenter that he had been told to use a PSC.
In written evidence the BBC had told the committee it was unaware of anyone eligible to be a staff member who had been denied such status.
But committee chair Margaret Hodge said she had heard from one long-term presenter who had been with the BBC for more than 20 years who said he had to go "off books into a service company" or face a "substantial pay cut".
"He was told he would not be employed unless he did that and when he asked for that to be put in writing that was refused to him," she said.
"He was told by the person whom he was negotiating with - he works full-time with the BBC, has no other employment, has been on his contract for probably getting on for 20 years: 'don't worry, if you have a service company HMRC is much less likely to investigate you'.
"That's what he was told by the person who employed him."
She added: "I have absolutely no reason whatsoever to think that he was telling me anything other than the truth."
Ms Patel said: "We will follow that up because we take this seriously.
"I must emphasise that nothing we do is designed to avoid paying PAYE and NIC.
"The BBC makes sure that all of its tax processes are properly reviewed by HMRC. In addition, annually, just like any employee, we give the HMRC details of every single personal service company, every freelance contract and every self-employed person."
It had been "custom and practice" that presenters across the whole industry were employed on a freelance basis, she said.
But Mrs Hodge hit back, telling her: "A lot of people I think are probably on these contracts are the face of the BBC and therefore to pretend that they are anything other than pretty permanent features on our television screens and on the radio is a bit naive."
Defending the arrangements Ms Patel told the committee: "Every one of our tax processes are properly documented and reviewed by HMRC to ensure the BBC is paying the right tax at the right time.
"In addition, we ensure that HMRC annually in our return have details of every freelance contract, self-employed, sole-trader or personal service company, the name of the individual, the name of the service company, all fees, expenses and VAT paid by the BBC to those companies.
"In this way HMRC have complete visibility to monitor service companies."
Mrs Hodge told her: "You put the obligation on either HMRC or the individual and the individual to whom I talked felt very bullied by those obligations.
"I am anxious to establish whether you, as the employer, feel completely satisfied that all these presenters, all these people working as producers, directors, whatever - they are the face of the BBC many of these people - are you satisfied you are working within the law?"
Ms Patel replied: "Yes I am. Nothing we do is designed to avoid tax."
At least 41 BBC "off payroll" freelancers earning £100,000 or more last year did not pay tax at source, with five of these earning more than £150,000 per year, according to the corporation.
A total of 318 people earning more than £50,000 were also shown as having not paid tax at source, according to the statistics, obtained following a freedom of information request by Conservative MP David Mowat.
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